One of the key functions in any business is that of the chief financial officer (CFO). Larger companies always use CFO's to control important and sensitive financial and accounting aspects of the business. Unfortunately, smaller companies haven't had the resources to employ CFO's. This function has been performed by the owner or has been delegated to untrained staff.
The virtual CFO is a simple concept. By taking advantage of today's technology, an experienced, professional financial officer can provide the essential services of a CFO without having to be on sight or on the payroll.
This is good news for the small business. For a fraction of the cost of a full-time employee, the smaller company can have the CFO function filled by an experienced professional.
To really understand how the virtual CFO works, let's take a hypothetical virtual CFO and follow him through a typical business day.
Our virtual CFO's office is in his home. First thing in the morning he logs onto his computer and checks email messages. Client A has forwarded him a loan package from the banker. The CFO opens the attached documents and reviews them for the key elements he wants to see. He sends a reply to Client A regarding a couple of changes and files the email in a computer folder he maintains for Client A.
Client B has sent an email asking for his thoughts on the price contained in a new contract. Our CFO takes a few minutes to make some calculations and confirm information that has been provided. He then sends an email reply telling what he thinks the price should be and why.
Our CFO then places a phone call to the office manager at Client C to see how things are going. While they are talking he opens their accounting system (web based so he can get on line from anywhere) and reviews the prior day's sales and current cash position. He asks a few questions about the invoices booked the previous day and answers the bookkeeper's question about how to book an unusual transaction.
The CFO asks the office manager to transfer him to the company president. After discussing some new developments in the business, both the CFO and company president open the weekly cash flow projection and review a projected cash shortfall two weeks out. The president is feeling pretty good about a new contract that will bring in sufficient funds to meet the shortfall. He does ask our CFO to attend a weekly staff meeting to be held the following Monday as they will be presenting the new incentive compensation program. With some spare time, the CFO now turns to work on a proposal for a potential new client. He works on it for about 45 minutes until time to join an on-line board meeting for Company D.
Having already thoroughly reviewed the board package, the CFO allows ten minutes before the call to review his notes. He then dials into the meeting and spends the next hour and a half going through a rather extensive and somewhat boring agenda. One section of the meeting involves issues that don't concern the CFO. He hits the mute button on his phone and turns back to his computer. The CFO types his thoughts on points discussed thus far and makes a couple of notes of things he needs to follow-up with the staff. He rejoins the meeting to answer some questions about the financial picture of the company. By the time the meeting draws to a close, our CFO has already emailed a couple of requests for information and has nearly finished his assignments from the meeting.
Just before lunch, the CFO will again check his email and responds to two other questions from clients.
The afternoon is going to be spent on-sight at a new client's manufacturing plant. The CFO is helping the production department create a value stream map to identify ways to eliminate waste.
In a single day, this virtual CFO has been able to perform key tasks for five different companies. He has been virtually in the next office when needed, but each company has only had to pay a fraction of the cost of having him on site and on the payroll full-time.